The Protect Our Communities Foundation v. City of San Deigo CA4/1

Filed 6/25/26 The Protect Our Communities Foundation v. City of San Deigo CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

THE PROTECT OUR COMMUNITIES D083588
FOUNDATION,

Plaintiff and Appellant, (Super. Ct. No. 37-2021-
00029833-CU-WM-CTL)
v.

CITY OF SAN DIEGO,
ORDER MODIFYING OPINION
Defendant and Appellant; AND DENYING REHEARING

SAN DIEGO GAS & ELECTRIC NO CHANGE IN JUDGMENT
COMPANY,

Real Party in Interest and
Appellant.

THE COURT:
It is ordered that the opinion filed May 26, 2026, be modified as follows:
On page 3, the first sentence under the heading is deleted and replaced
with the following:
In 1920, San Diego Consolidated Gas & Electric Company
entered gas and electric franchise agreements with the City
and became the City’s provider of gas and electricity for a
50-year term. In 1940, San Diego Consolidated Gas &
Electric Company changed its name to San Diego Gas &
Electric Company.

On page 27, after the last sentence of the second full paragraph, add as
footnote 20 the following footnote, which will require renumbering of all
subsequent footnotes:
Since the filing of this opinion, the Second District issued
its opinion in Nguyen v. City of Los Angeles (June 22, 2026,
B340105) ___ Cal.App.5th ___ [2026 Cal.App. Lexis 377].
Having reviewed this opinion, we do not believe it affects
the conclusions reached here.

There is no change in the judgment.
The petition for rehearing is denied.

DATO, Acting P. J.

Copies to: All parties

2
Filed 5/26/26 The Protect Our Communities Foundation v. City of San Deigo CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

THE PROTECT OUR COMMUNITIES D083588
FOUNDATION,

Plaintiff and Appellant,
(Super. Ct. No. 37-2021-
v. 00029833-CU-WM-CTL)

CITY OF SAN DIEGO,

Defendant and Appellant;

SAN DIEGO GAS & ELECTRIC
COMPANY,

Real Party in Interest and
Appellant.

APPEAL from orders of the Superior Court of San Diego County,
Katherine A. Bacal, Judge. Affirmed.
Shute, Mihaly & Weinberger, Winter King; Malinda R. Dickenson for
Plaintiff and Appellant The Protect Our Communities Foundation.
Mara W. Elliott and Heather Ferbert, City Attorneys, M. Travis
Phelps, Assistant City Attorney, and Matthew Zollman, Deputy City
Attorney, for Defendant and Appellant City of San Diego.
Gibson, Dunn & Crutcher, David A. Battaglia, Maurice Suh, James L.
Zelenay, Jr., Peter S. Modlin, Blaine H. Evanson and Zachary C. Freund for
Real Party in Interest and Appellant.

I. INTRODUCTION

The Protect Our Communities Foundation (POCF)1 challenges the City
of San Diego’s (the City) award of gas and electric franchises (the franchises)
to real party in interest San Diego Gas & Electric Company (SDG&E). POCF
contends the City’s approval of the franchises and associated agreements
violated the Constitution of the State of California, the San Diego City
Charter (the Charter), and the California Environmental Quality Act (CEQA,
Pub. Resources Code, § 21000 et seq.). Specifically, it argues the trial court
erred: (1) by rejecting POCF’s claims that the City’s invitation to bid process
violated the Charter’s requirements for open competition and public bidding;
(2) in ruling that certain surcharges were not “taxes” subject to
Proposition 26; and (3) by rejecting POCF’s claim that the City was required
to conduct an environmental review under CEQA.
The City and SDG&E cross-appeal the trial court’s grant of a writ of
mandate severing from the franchise agreements provisions requiring that
any decision to void the franchises before the end of their term be approved
by a two-thirds majority of the San Diego City Council (City Council), instead
of a bare majority.
As we explain below, we first conclude that POCF did not meet its
burden to prove that the City violated the Charter’s requirements for

1 According to its petition, POCF is a nonprofit public benefit corporation
and “represents the interests of San Diego and Southern California
residential ratepayers in proceedings before the California Public Utilities
Commission and other California agencies and in the courts.”
2
competitive bidding for the franchises. Accordingly, the trial court properly
denied POCF’s third cause of action for a writ of mandate directing the City
to void its approvals of the franchise ordinances. We further hold that the
four challenged surcharges that are embedded in the franchise ordinances
fall within an exemption to the requirements of Proposition 26 and are
therefore not unconstitutional taxes; that the plain language of the Charter
precludes the franchise ordinances’ requirement that a two-thirds vote of the
City Council would be necessary to terminate the franchises; and that the
award of the franchises did not constitute a project for purposes of CEQA,
and therefore the City properly concluded that CEQA did not apply to the
award of these franchises. The orders are affirmed.

II. FACTUAL AND PROCEDURAL BACKGROUND2
In 1920, SDG&E entered gas and electric franchise agreements with
the City and became the City’s provider of gas and electricity for a 50-year
term. In 1970, SDG&E entered new agreements with the City for another
50-year term, ending in 2020. In September 2020, in anticipation of the
expiration of those franchise agreements, then-Mayor Kevin Faulconer issued
an invitation to bid for new gas and electric franchise agreements, inviting
any qualified company to bid. In December 2020, the City Council opened the
bids and SDG&E was revealed to be the sole bidder. The City’s new mayor,
Todd Gloria, reviewed SDG&E’s bids, declared them nonresponsive “based on
the exceptions contained to the material terms,” and cancelled the initial
bidding process. The City extended the then-existing franchises for 135 days.
In March 2021, Mayor Gloria issued new invitations for any qualified
company to bid on the gas and electric franchises. These invitations to bid

2 This section provides a general background regarding the litigation.
The facts related to the specific claims at issue in this appeal will be
discussed in section III, post.
3
provided 20-year terms for both the gas and electric franchises but divided
those terms into an initial term of ten years followed by a ten-year
conditional extension. In April 2021, the City Council unsealed the bids and
SDG&E was once again the sole bidder for both franchises. After
negotiations, the City and SDG&E agreed on the terms of the franchise
agreements, which were then put before the City Council for approval. The
City and SDG&E also reached agreement on the terms of an energy
cooperation agreement, an administrative memorandum of understanding
(MOU), and an undergrounding MOU.
Thereafter, the City concluded that awarding the franchises to SDG&E
constituted “a fiscal and administrative activity of a government that will not
result in a direct or indirect physical change in the environment,” and thus

“is not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).”3
Alternatively, it found the franchise agreements were exempt from CEQA
under CEQA Guidelines section 15301, subdivision (b), which exempts
existing utility facilities.
In May 2021, the City Council voted and approved the proposed
franchise agreements between the City and SDG&E. In June 2021, the City
Council formally approved two resolutions that had been voted on at the May

meeting.4 The City Council adopted the franchise agreements—ordinance

3 “CEQA is implemented by an extensive series of administrative
regulations promulgated by the Secretary of the Natural Resources Agency,
ordinarily referred to as the ‘CEQA Guidelines.’ ” (Union of Medical
Marijuana Patients, Inc. v. City of San Diego (2019) 7 Cal.5th 1171, 1184
(UMMP).) The CEQA Guidelines are codified at title 14 of the California
Code of Regulations section 15000 et seq.

4 The first resolution, resolution No. 313554, included findings that the
City Council had determined the franchise agreements and energy
4
Nos. 21327 and 21328—and awarded SDG&E the electric and gas franchises
with the City.
In November 2021, acting pursuant to express authority granted to the
mayor by the City Council, the City and SDG&E executed the administrative
MOU which established the general work requirements for SDG&E
activities, including a requirement that SDG&E and its contractors comply
with all applicable laws and City requirements. In March 2022, the City
Council adopted by ordinance the undergrounding MOU between the City
and SDG&E which established a protocol for the design, procurement, and
construction necessary to convert SDG&E’s electrical facilities to
underground facilities.
In July 2021, POCF filed a verified petition for writ of mandate
asserting four causes of action for alleged: (1) unlawful imposition of a
special tax; (2) violations of competitive bidding mandates; (3) CEQA
violations; and (4) impermissible delegation of police power. POCF requested
an order voiding the City’s approval of the franchises and related
agreements. The trial court bifurcated the first cause of action for alleged
CEQA violations and issued an order on December 23, 2022 (the December
Order), denying the petition as to POCF’s first cause of action. After a second
hearing addressing the remaining causes of action, the trial court issued an
order on October 10, 2023 (the October Order), denying the petition except
with respect to one argument raised in support of POCF’s second cause of

cooperation agreement were not subject to CEQA. The second resolution,
resolution No. 313555, authorized the mayor to execute the energy
cooperation agreement with SDG&E.
5
action (i.e., severing from the ordinances a two-thirds voting requirement).

All parties appealed.5
III. DISCUSSION
A. THE CITY DID NOT VIOLATE ITS CHARTER’S COMPETITIVE
BIDDING MANDATES
1. Additional Background
In 2020, the City issued invitations to bid for new gas and electric
franchises. SDG&E bid on both franchises. In December 2020, Mayor Gloria
determined SDG&E’s bid to be unresponsive based on the exceptions to the
material terms of the advertised franchises. Mayor Gloria canceled the then-
pending invitations to bid and the City Council later entered into an
agreement with SDG&E to extend the existing franchises to June 1, 2021.
In March 2021, Mayor Gloria issued new invitations to bid for the gas
and electric franchises. The solicitations stated that “[t]he franchise may be
awarded by introduction and adoption of an ordinance substantially in the
form specified as either Exhibit A or Exhibit B attached hereto.” The
Exhibit A draft ordinance expressly stated that the grantee possessed a
“certain franchise . . . acquired pursuant to section 19 of article XI of the
Constitution of the State of California, as the section existed prior to its
amendment on October 10, 1911.” As we discuss below, such a “certain
franchise” is known as a “constitutional franchise.” The Exhibit B draft

5 We ordered the parties to submit briefing on whether the October
Order was an appealable order. We later directed the appeal to proceed and
allowed the parties to address appealability in their appellate briefing. All
parties contend the October Order is appealable. We agree that the October
Order, together with the December Order, are appealable as a final
determination of the parties’ rights which left no issue for future
consideration except the fact of compliance or noncompliance with the terms
of the orders. (Dhillon v. John Muir Health (2017) 2 Cal.5th 1109, 1115.)
6
ordinance was “for bidders who do not possess such a ‘constitutional

franchise’ for lighting.”6
In its third cause of action, POCF sought mandamus relief under Code
of Civil Procedure section 1085, alleging the City violated competitive bidding
mandates. POCF asserted the City had a ministerial duty under its charter
to ensure all contracts were competitively bid. It argued that the City’s
invitations to bid violated public bidding requirements by adopting a two-
tiered system—one ordinance for companies with a “constitutional franchise,”
and a separate ordinance for bidders lacking such a franchise. As a
secondary argument, POCF also alleged that the invitations to bid violated
public bidding requirements because, after the bids were unsealed, the
ordinances adopted by the City modified the applicable criteria from those set
forth in the ordinances attached as exhibits to the invitations to bid.
POCF claimed the invitations to bid contravened Charter section 94,
which requires that contracts for the “ ‘construction, reconstruction or
repair’ ” of public infrastructure—including roads, buildings, and utilities—
must follow competitive bidding procedures established by ordinance.
Contracts not complying with this provision are deemed void and
unenforceable against the City. (Charter, art. VII, § 94.) POCF also cited
section 100 of the Charter which prohibits any City officer or employee from
giving preferential treatment to a bidder by providing selective information
or withholding it, or from misleading bidders regarding the required
materials or supplies; and Charter section 103, which requires that the City
Council’s grant of a franchise must be preceded by “ ‘an opportunity for free
and open competition.’ ”

6 For ease of reference, we refer to Exhibit A bidders with a
constitutional franchise as proceeding under “option A” and Exhibit B bidders
as proceeding under “option B.”
7
POCF maintained that “[c]ompanies with a constitutional franchise
would start out with a competitive advantage to those who do not possess a
constitutional franchise, because a city can neither charge money for a
constitutional franchise nor may it terminate a constitutional franchise
without compensation by granting an exclusive franchise to a different
entity.” It alleged that SDG&E did not in fact possess a constitutional
franchise. Accordingly, it argued to the trial court that the City’s references
to a constitutional franchise improperly favored SDG&E and discouraged
other entities from bidding because it signaled to possible bidders that
SDG&E held property rights that could not be extinguished except through
eminent domain proceedings.
POCF also argued that the City impermissibly provided SDG&E with
veto authority over City policy. POCF claimed the City changed the
structure of the administrative and undergrounding MOUs to give SDG&E
veto power over the terms of agreements that had not yet been negotiated at
the time the City approved the ordinances. POCF also noted SDG&E vetoed
certain items in the invitations to bid, requiring that SDG&E: (1) comply
with the City’s objective to reduce greenhouse gas emissions to the fullest
extent practical, eliminating the word “fullest”; (2) implement the “City’s
desire to accomplish the goals set forth in its Climate Action Plan dated
December 2015, and any revised or successive climate plan,” eliminating the
term “and any revised or successive climate plan”; (3) expand distributed
energy resources; and (4) replace terms reflecting the City’s regulatory
authority with an agreement “that a Superior Court judge or appellate court,
not the City, will determine the contract terms for cost responsibility of all
relocations of Grantee facilities necessitated by all City water projects from
now until 2041.”

8
In response, SDG&E claimed it possessed a constitutional franchise
because it had provided utility services in the City since before October 10,
1911. It argued there was no favoritism; the ordinances merely reflected the
reality that SDG&E held a constitutional franchise in San Diego, whereas
other potential bidders did not. It did not address POCF’s argument that the
City impermissibly provided SDG&E with veto authority over City policy.
The trial court acknowledged the parties’ dispute over whether SDG&E
had a constitutional franchise but did not decide the issue. It concluded the
City did not “tilt the playing field” in SDG&E’s favor by acknowledging that
SDG&E may be differently situated if it had a constitutional franchise. It
also rejected the argument that requiring non-SDG&E bidders to either pay
to acquire SDG&E’s infrastructure or litigate with SDG&E created an
uneven playing field. The court did not separately address each of POCF’s
arguments claiming the City improperly changed requirements established in
the invitations to bid after bids were submitted. But the court indicated it
had fully considered the written and oral arguments of all parties and the
evidence presented. Finding no evidence that any bidder was deterred from
submitting a bid because of anti-competitive procedures, the court denied the
petition for writ of mandate.

9
2. Analysis7
POCF contends the City’s invitations to bid violated public bidding
requirements because the City (1) improperly changed the requirements
established in the invitations to bid after bids were submitted and
(2) adopted a two-tiered system—one ordinance for companies with a
constitutional franchise, and a separate ordinance for bidders lacking such a
franchise. We provide the standards governing such claims, then address
each in turn.
A writ of mandate compels a government official or agency to perform a
legally required duty. (Code Civ. Proc., § 1085.) Courts may use this remedy
not only for ministerial actions, but also for legislative or quasi-legislative
acts. (County of Los Angeles v. City of Los Angeles (2013) 214 Cal.App.4th
643, 653.) In considering whether to issue the writ, a trial court must
determine whether the agency had a mandatory duty that can be directly
enforced or a policy-based duty subject to judicial deference. (Ibid.) This
determination is typically reviewed independently by the court because it
involves interpreting the law. (Ibid.) A ministerial act is one the law
specifically requires an official to perform in a prescribed manner, without
discretion. (Ibid.) In contrast, discretionary acts involve judgment or choice.
(Id. at pp. 653–654.) Ordinarily, a writ of mandate cannot control how
discretion is exercised, but it may issue to correct an abuse of discretion. (Id.

7 After reviewing the record, we requested supplemental briefing from
the parties regarding who had the burden of proving SDG&E had a
constitutional franchise and whether the City had a good faith basis for
believing SDG&E possessed a constitutional franchise. Assuming SDG&E
did not have a constitutional franchise, we inquired whether the City acted
arbitrarily and capriciously in setting up a bidding solicitation scheme that
relied on that assumption and whether, to the extent the invitations to bid
implied that some entity held a constitutional franchise, it was reasonable to
assume this information would deter bidders.
10
at p. 654.) Courts do not substitute their judgment for that of the agency.
(Ibid.) If reasonable people could differ about whether the agency’s decision
was wise, the agency’s choice must stand. (Ibid.)
A petitioner seeking mandate relief under Code of Civil Procedure
section 1085 bears the burden of pleading and proving the facts establishing
entitlement to relief. (California Correctional Peace Officers Assn. v. State
Personnel Bd. (1995) 10 Cal.4th 1133, 1153 (Cal. Correctional Peace Officers);
Evid. Code, § 500 [“a party has the burden of proof as to each fact the
existence or nonexistence of which is essential to the claim for relief or
defense that he is asserting”].) The definitional elements of a cause of action
describe the minimum showing a petitioner must make to support a favorable
judgment. (Beck Development Co. v. Southern Pacific Transportation Co.
(1996) 44 Cal.App.4th 1160, 1205.) Accordingly, the petitioner must
demonstrate the agency’s decision was legally unreasonable or invalid as a
matter of law. (Mike Moore’s 24-Hour Towing v. City of San Diego (1996)
45 Cal.App.4th 1294, 1306 (Mike Moore’s).)
Competitive bidding requires that bids conform to the stated
specifications, and bids that fail to do so are ordinarily ineligible for
acceptance. (Ghilotti Construction Co. v. City of Richmond (1996)
45 Cal.App.4th 897, 904 (Ghilotti).) However, courts have long recognized
that a bid may still be accepted if it substantially complies with the bidding
requirements, even if it is not strictly responsive, so long as the deviation is
inconsequential—that is, it did not affect the bid price or give the bidder an
unfair advantage over others. (Ibid.) Whether a bid materially deviates from
the specifications is a question of fact. (Id. at p. 906.)
“A public entity’s ‘award of a contract, and all the acts leading up to the
award, are legislative in character.’ ” (Mike Moore’s, supra, 45 Cal.App.4th at

11
p. 1303.) Judicial review under Code of Civil Procedure section 1085 is
limited to whether the agency acted arbitrarily, capriciously, without
evidentiary support, or in violation of public policy or procedural fairness.
(Mike Moore’s, at p. 1303.) These are legal questions, reviewed de novo on
appeal unless factual disputes are involved. In that case, findings supported
by substantial evidence will be upheld. (Ibid.)
a. Changed Bid Requirements
POCF contends that the invitations to bid violated competitive bidding
requirements because the ordinances ultimately adopted by the City differed
from the draft ordinances attached as exhibits to the invitations to bid. It
reprises its arguments concerning alleged post-bid changes to the MOUs, the
Climate Action Plan, and distributed energy resources. We reject the City
and SDG&E’s contention that POCF forfeited these arguments by not raising

them in the trial court but agree the arguments lack merit.8
With respect to the MOUs, POCF argues the City impermissibly
allowed post-bid changes that converted the administrative MOU into a
negotiated document and limited the City’s authority under the
undergrounding MOU. POCF further asserts the City adopted ordinances
that eliminated requirements contained in the exemplar ordinances attached
to the invitations to bid, thereby misleading potential bidders and materially

8 POCF also argues on appeal that the renegotiated agreements changed:
(1) the payment terms making it more difficult for the City to terminate the
franchises; and (2) costs for liquidated damages and funding of employee
bonuses favorable to SDG&E. POCF forfeited these arguments by failing to
make them in the trial court. (Hewlett-Packard Co. v. Oracle Corp. (2021)
65 Cal.App.5th 506, 548.)

12
altering the competitive landscape after bids were unsealed.9 POCF also
claims the trial court failed to rule on these issues and requests we direct
entry of judgment in its favor on this cause of action.
The record does not support POCF’s assertion that the trial court failed
to address these claims. The court expressly denied mandate relief on the
third cause of action after stating it had “fully considered” all written and
oral arguments. Under the doctrine of implied findings, we presume the trial
court made all factual determinations necessary to support its ruling, so long
as substantial evidence supports those determinations. (Brewer v. Carter
(2013) 218 Cal.App.4th 1312, 1320.) Accordingly, we presume the court
found that the post-bid changes were not material, did not mislead bidders,
did not confer an unfair advantage, and did not violate competitive bidding
requirements or the City Charter.
POCF’s substantive argument—that the adopted ordinances materially
deviated from the bid specifications—fails on the merits. The invitations to
bid expressly stated that the franchises “may be awarded by introduction and
adoption of an ordinance substantially in the form specified as either Exhibit
A or Exhibit B attached hereto.” By their plain terms, the invitations
contemplated that the final ordinances would not be identical to the exemplar

9 Specifically, POCF noted the adopted ordinances eliminated terms in
the invitations to bid: (1) requiring the franchisee to cooperate in good faith
to attain the goals of the Climate Action Plan “ ‘and any revised or successive
climate plan’ ” with the adopted ordinances eliminating the quoted language;
(2) requiring that SDG&E eliminate greenhouse gases to the “ ‘fullest’ ”
extent practical by deleting the quoted word; (3) requiring distributed energy
systems permit excess energy be made available to other customers;
(4) requiring SDG&E “ ‘not unreasonably oppose or obstruct’ ” mechanisms to
support renewable energy by eliminating the quoted language; and
(5) allowing the City to determine costs associated with relocated water
projects and instead allowing courts to decide the issue.
13
ordinances, but only substantially similar. Competitive bidding law does not
require absolute identity between bid specifications and the final contract
particularly where, as here, the governing documents expressly allow for
modification. (Ghilotti, supra, 45 Cal.App.4th at p. 904.)
The invitations to bid further reserved the City’s right to negotiate
changes to bid terms or to negotiate with the incumbent franchise holder to
renew, extend, or replace the existing franchise. They also expressly
contemplated post-bid negotiation of the energy cooperation agreement,
directing bidders to submit narrative proposals addressing energy policy and
identify desired terms and commitments. Bidders were specifically asked to
describe any barriers to alignment with provisions of the exemplar
ordinances, underscoring that deviations were anticipated and evaluated as
part of the competitive process. Consistent with this framework, all
proposals for the cooperation agreement were subject to acceptance, rejection,
or modification by the mayor. SDG&E’s successful bids expressly requested
negotiations over specific ordinance language, precisely as the invitations to
bid contemplated. Against this record, POCF’s assertion that the City was
bound to adopt the exemplar ordinances without deviation is untenable.
Finally, POCF presented no evidence that any bidder was deterred
from submitting a bid, misled as to the bidding requirements, or placed at a
competitive disadvantage because of the challenged changes. Although two
entities initially expressed interest in the franchises, neither ultimately
submitted a bid, and POCF offered no evidence explaining why they declined
to do so. In the absence of a showing that any deviation materially affected
price, competition, or the fairness of the bidding process, competitive bidding
law does not prohibit the City’s actions. What remains is nothing more than
a disagreement with the City’s policy choices and its exercise of discretion—

14
matters that are legislative in character and entitled to substantial judicial

deference.10 (Mike Moore’s, supra, 45 Cal.App.4th at p. 1303.)
In sum, POCF failed to carry its burden of proving that the City
violated competitive bidding requirements or breached a ministerial duty
enforceable by writ of mandate. The record demonstrates that the bidding
process expressly contemplated negotiation and modification, that any post-
bid changes were within the scope of the invitations to bid, and that no bidder
was misled or disadvantaged. Because POCF did not establish that the City
acted arbitrarily, capriciously, or in violation of law, the trial court properly
denied mandate relief on these claims.
b. Constitutional Franchise
The trial court noted that the parties disagreed as to whether SDG&E
possesses a constitutional franchise but did not resolve the dispute. The

10 POCF’s reliance on Baldwin-Lima-Hamilton Corp. v. Superior Court of
San Francisco (1962) 208 Cal.App.2d 803, Konica Business Machines U.S.A.,
Inc. v. Regents of University of California (1988) 206 Cal.App.3d 449, Eel
River Disposal and Resource Recovery, Inc. v. Humboldt (2013)
221 Cal.App.4th 209, DeSilva Gates Construction, LP v. Department of
Transportation (2015) 242 Cal.App.4th 1409, and Valley Crest Landscape,
Inc. v. City Council (1996) 41 Cal.App.4th 1432 is misplaced because each
involved a losing bidder claiming prejudice as a result of the governmental
defendant’s alleged failure to adhere to bid specifications. (Baldwin-Lima, at
pp. 807–808, 822 [deviation from bid requirement that equipment be
manufactured in the United States allowed winning bidder to beat plaintiff’s
price]; Konica, at pp. 451, 453–454, 457 [acceptance of bid that deviated from
listed performance specifications for copiers put bidders in unfair position of
having to guess what would satisfy defendant’s needs]; Eel River, at pp. 214,
237 [changed criteria after bids were unsealed and introducing previously
unknown factor disadvantaged all bidders except the one receiving franchise];
DeSilva, at pp. 1413, 1423–1424 [allowing correction of “ ‘material’ ” bid
deviation while rejecting bid with no material deviation constituted an abuse
of discretion]; Valley Crest, at pp. 1435, 1442–1443 [winning bidder received
“unfair advantage” being allowed to correct material bid mistake after
submission].)
15
parties fully litigated the issue, and it was central to the parties’ arguments
about the validity of the bidding process. On appeal, POCF argues that the
separate bid terms gave SDG&E an unfair competitive advantage in the
bidding process, alleging that SDG&E in fact did not have a constitutional
franchise, and, further, that SDG&E presented no admissible evidence
supporting its constitutional franchise claim. The City and SDG&E’s
combined respondent’s brief does not address the issue at all, prompting us to
request supplemental briefing. We therefore begin by clarifying what
constitutes a constitutional franchise, then address which party bore the
burden of proof on that issue and whether that burden was met.
Although not defined in the Charter, the term “franchise” generally
refers to services that government is obligated to provide—such as water,
gas, electricity, or telephone service—and the right to use public streets and
ways to deliver those services to the public. (Copt–Air v. City of San Diego
(1971) 15 Cal.App.3d 984, 987–988.) A franchise is conferred through a city’s
legislative authority. (Pacific Rock etc. Co. v. City of Upland (1967) 67 Cal.2d
666, 668.) It arises when a government authorizes private companies to place
infrastructure on public property to deliver utilities across city streets and
other public ways. (Saathoff v. City of San Diego (1995) 35 Cal.App.4th 697,

703–704 (Saathoff).)11 A private utility’s right to use public streets under a
franchise is a property interest created by contract, namely the franchise
agreement (Southern Cal. Gas Co. v. City of Vernon (1995) 41 Cal.App.4th
209, 218), “and a franchise fee is the purchase price of the franchise.” (Jacks
v. City of Santa Barbara (2017) 3 Cal.5th 248, 262 (Jacks).)

11 Courts have also recognized that cities may grant franchises not only
for traditional utilities but also for other public services, such as ambulance
service, garbage collection, and cable television. (Saathoff, supra,
35 Cal.App.4th at p. 704.)
16
In contrast, a constitutional franchise derives from article XI,
section 19, of the 1879 California Constitution, which allowed any person or
company to acquire a constitutional franchise merely by installing
infrastructure in public streets to provide artificial light—without the need
for legislative approval. (City of Santa Cruz v. Pacific Gas & Electric Co.

(2000) 82 Cal.App.4th 1167, 1171 (Santa Cruz).)12 Once infrastructure was
installed, the arrangement became a binding contract with the state and
granted the provider a protected property interest. (Id. at pp. 1171–1172.)
“[A]ny requirement of payment for this privilege or limitation on its duration
was an invalid restriction.” (Id. at pp. 1181–1182.) The existence of a
constitutional franchise gives the franchisee the continuing authority to
extend its infrastructure to new streets “so far as necessary to serve the
municipality . . . .” (Russell v. Sebastian (1914) 233 U.S. 195, 210.)
Although the Constitution was amended in 1911 to eliminate this type
of automatic franchise, the amendment did not affect entities that had
already begun providing electricity for artificial light using city streets.
(Jacks, supra, 3 Cal.5th at p. 264 [“The constitutional amendment did not

12 As amended in 1884, article XI, section 19 stated as follows: “ ‘In any
city where there are no public works owned and controlled by the
municipality, for supplying the same with water or artificial light, any
individual, or any company duly incorporated for such purpose under and by
authority of the laws of this State, shall, under the direction of the
Superintendent of Streets, or other officer in control thereof, and under such
general regulations as the municipality may prescribe for damages and
indemnity for damages, have the privilege of using the public streets and
thoroughfares thereof, and of laying down pipes and conduits therein, and
connections therewith, so far as may be necessary for introducing into and
supplying such city and its inhabitants either with gaslight or other
illuminating light, or with fresh water for domestic and all other purposes,
upon the condition that the municipal government shall have the right to
regulate the charges thereof.’ ” (Santa Cruz, supra, 82 Cal.App.4th at
p. 1171.)
17
impair rights under existing constitutional franchises.”]; Santa Cruz, supra,
82 Cal.App.4th at p. 1172.) Their rights remained intact, and they could
continue providing electricity for lighting without being subject to new fees
for doing so. (Santa Cruz, at p. 1172.) But to complicate matters, the
infrastructure used to deliver electricity for lighting—such as poles and
wires—also carried electricity for additional purposes, including heating and
cooking. (Ibid.) To cover these non-lighting uses, entities holding
constitutional franchises entered into separate agreements with
municipalities. (Ibid.) These agreements, often referred to as
“complementary” franchises, required the payment of fees for the continued
use of public streets to supply electricity or gas for non-lighting services.
(Ibid.)
POCF contends SDG&E had the burden of proving the existence of a
constitutional franchise because the City and SDG&E asserted in their
answers that they acted lawfully. The City and SDG&E counter that POCF
alleged, as an element of its third cause of action, that SDG&E did not
possess a constitutional franchise and POCF was therefore obliged to prove
its non-existence. We agree with the City and SDG&E that POCF had the
burden of proof on this issue.
The City structured the bidding process around whether a bidder
possessed a constitutional franchise and awarded the franchise under the
ordinance applicable to an entity asserting such a right. Whether SDG&E in
fact possessed a constitutional franchise is therefore integral to POCF’s claim
that the bidding process violated competitive bidding mandates. POCF
expressly alleged that SDG&E lacked a constitutional franchise and that the
two-ordinance structure improperly conferred a competitive advantage.
Because that allegation was essential to POCF’s cause of action, POCF bore

18
the burden of proving it. (Cal. Correctional Peace Officers, supra, 10 Cal.4th
at p. 1153.) POCF’s attempt to shift the burden based on the City’s and
SDG&E’s affirmative defenses is unavailing. An affirmative defense must
raise a “new matter” not already placed at issue by the complaint. (Code Civ.
Proc., § 431.30, subd. (b)(2); State Farm Mut. Auto. Ins. Co. v. Superior Court
(1991) 228 Cal.App.3d 721, 725.) The defenses asserted here merely denied
POCF’s allegations and did not inject new factual issues. They therefore
constituted a traverse, not a shifting of the burden of proof. (Bevill v. Zoura
(1994) 27 Cal.App.4th 694, 698.)
POCF’s alternative argument—that the burden should shift because
the existence of a constitutional franchise was peculiarly within SDG&E’s
knowledge—fails both procedurally and substantively. Exceptions to
Evidence Code section 500 are rare and narrowly construed. (Sargent
Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1670.) Whether the
traditional placement of the burden of proof should be modified depends on a
multifactor analysis that includes the parties’ comparative knowledge of the
issue, the accessibility of relevant evidence, the policy consequences of a
failure of proof, and the likelihood of the fact’s existence or nonexistence.
(Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 660–661.)
POCF did not raise this theory in the trial court, did not address the Lakin
factors on appeal, and identified no evidentiary record showing exclusive
control of relevant documents by SDG&E or the City. The argument is
therefore forfeited. (People v. Accredited Surety & Casualty Co., Inc. (2021)
65 Cal.App.5th 122, 132.)
POCF likewise forfeited three additional theories raised for the first
time in supplemental briefing—that constitutional franchises were
terminated in 1914, expired by 2011, or were negated by franchise fee

19
practices. Arguments not raised in the trial court or opening briefs may not
be introduced at this stage. (Hewlett-Packard Co. v. Oracle Corp., supra,
65 Cal.App.5th at p. 548.)
In summary, POCF’s challenge rises or falls on a factual premise it
failed to prove. Its claim of an unlawful, anti-competitive bidding process
depended entirely on the assertion that SDG&E lacked a constitutional
franchise and therefore received an improper advantage. Because POCF
bore—and failed to meet—the burden of proving that essential fact, the City’s
decision to structure the invitations to bid based on the possible existence of
such a franchise cannot be deemed arbitrary, capricious, or legally invalid.
Absent proof that the predicate assumption underlying the two-ordinance
framework was false, there is no basis for concluding the City violated its
competitive bidding obligations. The trial court therefore correctly denied the

petition for writ of mandate.13
B. THE FOUR CHALLEGED SURCHARGES ARE NOT
UNCONSTITUTIONAL TAXES
1. Voter Initiatives
Through a series of ballot initiatives, California voters have modified
the Constitution to regulate how local governments can impose taxes, fees,
and other assessments. (City of San Buenaventura v. United Water
Conservation Dist. (2017) 3 Cal.5th 1191, 1199 (San Buenaventura).)

Proposition 13, the initial measure in this series, established article XIII A.14
(San Buenaventura, at p. 1199.) Among other things, the initiative prohibits

13 The City’s opposed request to take judicial notice of nine City municipal
ordinances and two documents filed with the California Secretary of State,
filed on January 9, 2026, is denied.

14 All references to articles are to the California Constitution.
20
counties, cities, and special districts from enacting any “special tax” without a
two-thirds vote of the electorate, “ ‘ “to prevent local governments from
subverting its limitations.” ’ ” (Ibid.) However, courts consistently held that
article XIII A did not restrict local governments from imposing “ ‘legitimate
special assessments’ ”—charges on property owners to help defray the costs of
local improvements that directly benefit their properties. (San
Buenaventura, at p. 1199.)
In 1996, voters passed Proposition 218 to further restrict a local
government’s use of such special assessments. (San Buenaventura, supra,
3 Cal.5th at p. 1200.) It expanded Proposition 13’s protections by adding
article XIII D, which introduced new limits on assessments, fees, and charges
tied to property ownership. (San Buenaventura, at p. 1200.) This article
requires that property-related charges must not exceed the proportional cost
of the services provided to the property. (Ibid.) Proposition 218 also
introduced article XIII C, which limits local governments’ power to impose
taxes by requiring voter approval for all such taxes. (San Buenaventura, at

p. 1200.)15 The term “tax” was not specifically defined in Proposition 218.
(Citizens for Fair REU Rates v. City of Redding (2018) 6 Cal.5th 1, 11 (REU
Rates).)
In 2010, Proposition 26 expanded article XIII C’s reach by defining
“tax” to include “any levy, charge, or exaction of any kind imposed by a local
government . . . .” (Art. XIII C, § 1, subd. (e); San Buenaventura, supra,

15 Article XIII C provides that “local government[s]” may not “impose . . .
any general tax . . . until that tax is submitted to the electorate and approved
by a majority vote” (art. XIII C, § 2, subd. (b)), and may not “impose . . . any
special tax . . . until that tax is submitted to the electorate and approved by a
two-thirds vote” (id., § 2, subd. (d)).

21
3 Cal.5th at p. 1200.)16 It imposes on the state or local government the
burden of proving that any charge, levy, or assessment is not a tax (Schmeer
v. County of Los Angeles (2013) 213 Cal.App.4th 1310, 1322) and includes
seven enumerated exemptions to the definition of “tax” for certain types of
exactions. (Art. XIII C, § 1, subd. (e)(1)–(7).) By definition, a charge meeting
an exemption does not constitute a tax. (REU Rates, supra, 6 Cal.5th at
p. 11.) Any local government levy, charge, or exaction that does not meet an
exemption and lacks voter approval is an invalid and unconstitutional tax.
(Howard Jarvis Taxpayers Assn. v. Coachella Valley Water Dist. (2025)
108 Cal.App.5th 485, 504.)
2. Additional Background
The City Council approved ordinance No. 21327 (awarding gas
franchise) and ordinance No. 21328 (awarding electric franchise) to

SDG&E.17 Both ordinances imposed several surcharges that are at issue
before us. First, both ordinances imposed a surcharge of 3 percent of
SDG&E’s gross receipts “as consideration therefor and as compensation for
the use of the Streets of the City.” For clarity, we will refer to this surcharge
as the SDG&E surcharge. The ordinances also imposed a gas surcharge and
an electric surcharge “to be levied solely on customers in the City . . . .”

16 Proposition 26 observed that, despite Propositions 13 and 218,
California taxes continued to rise. (REU Rates, supra, 6 Cal.5th at p. 11.) It
also highlighted a growing trend in which lawmakers and local officials
labeled new taxes as “ ‘ “fees” ’ ” to bypass constitutional voter approval
requirements. (Ibid.)

17 Appellant’s February 14, 2025, unopposed request for judicial notice of
the 2002 electricity franchise award, ordinance No. O-19030, is granted.
(Evid. Code, §§ 452, subds. (b) & (c), 453.)
22
Finally, the electrical ordinance imposed an undergrounding surcharge of
3.53 percent.
The parties do not dispute that these surcharges are a “levy, charge, or
exaction . . . imposed by a local government . . . .” (Art. XIII C, § 1, subd. (e).)
Our next step is to determine whether any of the exemptions apply.
POCF alleges that the four charges do not fall within any of the seven
enumerated exemptions in subdivision (e) of section 1 of article XIII C. The
City and SDG&E argue that exemptions 1 and 4 apply, and therefore the four
charges are not a “tax” under Proposition 26. The trial court found that the
City did not meet its burden of showing exemption 1 applied but had met its
burden to show exemption 4 applied. Accordingly, the trial court denied the
fourth cause of action for a writ of mandate, finding the City had “met their
burden to show exemption 4 applies, such that the fees do not impose taxes
and are not subject to constitutional requirements for taxes.”
3. Analysis
As noted above, Proposition 26 places the burden on the local
government, in this case the City, to establish by a preponderance of the
evidence that an exemption applies. (Art. XIII C, § 1, subd. (e);
San Buenaventura, supra, 3 Cal.5th at p. 1214.) We review independently
whether the four charges qualify for an article XIII C, section 1,
subdivision (e) exemption. (Sutter’s Place, Inc. v. City of San Jose (2024)
104 Cal.App.5th 855, 863.) At issue here are exemptions 1 and 4, which
provide: (1) a “charge imposed for a specific benefit conferred or privilege
granted directly to the payor that is not provided to those not charged, and
which does not exceed the reasonable costs to the local government of
conferring the benefit or granting the privilege” (art. XIII C, § 1, subd. (e)(1));
and (4) a “charge imposed for entrance to or use of local government property,

23
or the purchase, rental, or lease of local government property” (id., § 1,

subd. (e)(4)).18 The trial court found exemption 4 applied and denied the
petition for writ of mandate on the fourth cause of action. We agree. Because
exemption 4 applies, we do not reach exemption 1.
Exemption 4 applies to charges “imposed for entrance to or use of local
government property, or the purchase, rental, or lease of local government
property.” (Art. XIII C, § 1, subd. (e)(4).) This exemption contains two
distinct clauses: the first addresses entrance to or use of government
property, and the second pertains to the purchase, rental, or lease of such
property. The parties do not discuss the second clause, implicitly conceding it
does not apply. (See Westside Center Associates v. Safeway Stores 23, Inc.
(1996) 42 Cal.App.4th 507, 529 [party “effectively concedes” an issue by
failing to address it in briefing].) Accordingly, our analysis focuses on the
first clause.
Turning to the first clause—which exempts charges imposed for
entering or using government property—the California Supreme Court
addressed this clause in Zolly v. City of Oakland (2022) 13 Cal.5th 780

18 The other five exemptions are for: (1) charges “imposed for a specific
government service or product provided directly to the payor that is not
provided to those not charged, and which does not exceed the reasonable costs
to the local government of providing the service or product” (art. XIII C, § 1,
subd. (e)(2)); (2) charges “imposed for the reasonable regulatory costs to a
local government for issuing licenses and permits, performing investigations,
inspections, and audits, enforcing agricultural marketing orders, and the
administrative enforcement and adjudication thereof” (id., § 1, subd. (e)(3));
(3) fines, penalties, or other monetary charges “imposed by the judicial
branch of government or a local government, as a result of a violation of law”
(id., § 1, subd. (e)(5)); and (4) charges “imposed as a condition of property
development” (id., § 1, subd. (e)(6)); and (5) “[a]ssessments and property-
related fees imposed in accordance with the provisions of Article [13]D.” (Id.,
§ 1, subd. (e)(7).)
24
(Zolly). There, the City of Oakland (Oakland) granted private waste haulers
the right to operate on public streets and property and required them to pay
franchise fees. (Id. at p. 784.) The Supreme Court granted review to
determine whether those franchise fees constituted taxes under
Proposition 26. (Zolly, at p. 784.)
Addressing the first clause of exemption 4, which exempts charges
“ ‘imposed for entrance to or use of local government property,’ ” the court in
Zolly concluded this exemption applies only to charges for the physical use of
property that the payor may enter or use. (Zolly, supra, 13 Cal.5th at
pp. 792–794.) Oakland, however, had not shown that the haulers paid the
fees in exchange for any specific use of government property unavailable to
the public. (Id. at p. 794.) This is a fact-specific requirement that focuses “on
the actual benefit exchanged between the payor and local government.”
(Ibid.)
POCF contends this exemption does not apply because City ratepayers
obtaining electricity or gas from SDG&E pay the four charges, not SDG&E.
The City and SDG&E do not dispute that the four charges are passed on to
ratepayers; rather they argue that the Supreme Court in Zolly, supra,
13 Cal.5th 780 properly characterized Jacks, supra, 3 Cal.5th 248 and Mahon
v. City of San Diego (2020) 57 Cal.App.5th 681 as examples of payments by a
utility in exchange for a property interest even though these fees are passed
through to ratepayers. (Zolly, at p. 795.) The trial court agreed with the City
and SDG&E. We agree with the result, but our approach is more nuanced.
The first clause of exemption 4 applies to charges “imposed for entrance
to or use of local government property.” (Art. XIII C, § 1, subd. (e)(4).) The
record is clear that the four charges enable SDG&E to use local government
property in a manner that is not available to the general public. The

25
ordinances expressly grant SDG&E the right to install, maintain, and use
“facilities,” “pipes,” “wires,” “conduits,” and “appurtenances” in the public
rights-of-way—in effect, granting SDG&E an easement above, along, and
below City streets. These are rights uniquely conferred on SDG&E as the
franchisee.
At the same time, City ratepayers who obtain electricity or gas from
SDG&E, also receive concrete benefits derived from the use of City property
in exchange for paying the four charges. Gas and electricity cannot be
delivered to homes and businesses without the infrastructure “under or over”
City streets. Thus, ratepayers benefit directly from the use of City streets,
even though they do not themselves install or maintain the infrastructure.
The fact the four charges are paid as part of the franchise ordinances
with SDG&E does not alter this analysis. Ratepayers receive electricity and
gas flowing “under or over” City streets and into their homes and
businesses—benefits they would not receive absent payment of the SDG&E
surcharge and the gas and electric surcharges. (Zolly, supra, 13 Cal.5th at
p. 794.) Ratepayers likewise benefit from the undergrounding surcharge.
Underground electrical lines are far less vulnerable to wind, falling trees,
vehicle collisions, and severe weather. As a result, ratepayers experience
fewer outages and faster restoration times—benefits of particular importance
to businesses and medically vulnerable residents. Undergrounding also
reduces wildfire ignition risk, a substantial public safety benefit in fire-prone
regions, and improves neighborhood aesthetics, which is associated with
increased property values.
We do not interpret the phrase “use of local government property” in
exemption 4 to require that the ratepayer must have the right to dig up a
street and install infrastructure in the same manner as the streets might be

26
used by a franchisee. Zolly instructs courts to look beyond formal labels and
focus instead “on the actual benefit exchanged.” (Zolly, supra, 13 Cal.5th at
p. 794.) Without the use of City’s streets to deliver gas and electricity,
ratepayers could not operate appliances, heat or cool their homes, or conduct
ordinary business activities dependent on utility service. The ordinary
meaning of “use” encompasses employing property to accomplish a purpose
or availing oneself of its function even without physical alteration. (See, e.g.,
Black’s Law Dict. (12th ed. 2024) [“To employ for the accomplishment of a
purpose; to avail oneself of”].)
We conclude the City has met its burden of establishing that the four
charges are exempt under exemption 4. Whether SDG&E or ratepayers are
classified as the payors of the four charges, both benefit from use of local

government property, all that is needed for exemption 4 to apply.19
Further, whether the four charges are viewed as imposed on SDG&E or
passed through to ratepayers, the record demonstrates a direct exchange of
value for the use of local government property. The City therefore met its
burden of establishing that the four charges fall within exemption 4 of article
XIII C, section 1, subdivision (e). Because the charges qualify for
exemption 4, they are not “taxes” within the meaning of Proposition 26 and
are not subject to its voter-approval requirements. The trial court properly

19 In its argument headings and substantive discussion of exemption 4,
POCF did not contend that the trial court was required to make an express
finding regarding the applicability of the final paragraph of article XIII C,
section 1, subdivision (e) to this exemption. The contention is therefore
forfeited, and we decline to consider whether that paragraph applies to
exemption 4. (Cal. Rules of Court, rule 8.204(a)(1)(B); Dilbert v. Newsom
(2024) 101 Cal.App.5th 317, 323 [“When a party fails to place an argument
under a proper heading or subheading, we need not consider the issue.”].)
27
denied the petition for writ of mandate on the fourth cause of action, and we
affirm that ruling.
C. THE TRIAL COURT CORRECTLY INTERPRETED THE CITY
CHARTER IN ORDERING THE SEVERANCE OF THE
TWO-THIRDS VOTING REQUIREMENT
1. Additional Background
The invitations to bid specified that the franchises would be awarded
pursuant to Charter section 103. That section requires approval of franchises

by a two-thirds vote of the City Council.20 The ordinances further provided
that a two-thirds vote of the City Council would be required to terminate the
franchises after 10 years for reasons other than municipalization.
Among other things, POCF alleged in its second cause of action that by
requiring a two-thirds vote to terminate the franchises after 10 years, the
City Council impermissibly violated Charter section 15. The trial court
agreed.
Specifically, the trial court held that the City’s decision to impose a
two-thirds voting requirement on franchise termination violated the express

terms of Charter section 15.21 It granted the petition for writ of mandate in

20 Charter section 103 provides, in relevant part: “ ‘The Council shall
have power to grant to any person, firm or corporation, franchises, and all
renewals, extensions and amendments thereof, for the use of any public
property under the jurisdiction of the City. Such grants shall be made by
ordinance adopted by vote of two-thirds (2/3) of the members of the Council
and only after recommendations thereon have been made by the Manager
and an opportunity for free and open competition and for public hearings
have been given. . . .’ ” (Charter, art. VII, ¶103.)

21 Charter section 15 provides: “A majority of the members elected to the
Council shall constitute a quorum to do business, but a less number may
adjourn from time to time and compel the attendance of absent members in
such manner and under such penalties as may be prescribed by ordinance.
28
part and severed the provisions requiring that any decision to void the
franchises before the end of their term be approved by a two-thirds majority
of the City Council, instead of a bare majority.
The City and SDG&E cross-appeal from that portion of the court’s
order. They assert the trial court misread Charter section 15 because that
section says nothing about whether, when, or under what circumstances the
City Council may adopt a supermajority voting threshold for future Council
action.
2. Analysis
A city charter serves as the highest form of law for the city, subordinate
only to the U.S. and California Constitutions and any overriding state
legislation. (Domar Electric, Inc. v. City of Los Angeles (1994) 9 Cal.4th 161,
170 (Domar).) A charter city is bound to follow its charter, and any action
that contradicts or fails to adhere to the charter is void. (Id. at p. 171.) We
interpret a city charter using the same principles that apply to statutory
interpretation, with the central aim of identifying and carrying out the
legislative intent. (Id. at pp. 171–172.) We start with the charter’s language
and apply its ordinary meaning. If the wording is unambiguous, we cannot
rewrite or expand it to serve an objective not evident from the text or
legislative history. (Id. at p. 172.) “While we apply our independent
judgment in construing a city charter, ‘[a]dministrative interpretations [of
city charter provisions] of longstanding are entitled to great weight unless

Except as otherwise provided herein the affirmative vote of a majority of the
members elected to the Council shall be necessary to adopt any ordinance,
resolution, order or vote; except that a vote to adjourn, or regarding the
attendance of absent members, may be adopted by a majority of the members
present. No member shall be excused from voting except on matters
involving the consideration of his own official conduct or in which his own
personal interests are involved.” (Charter, art. III, ¶15, italics added.)
29
they are plainly wrong.’ ” (Lozano v. City of Los Angeles (2022)
73 Cal.App.5th 711, 724.)
Starting with its plain language, Charter section 15 states, in part, that
“[e]xcept as otherwise provided herein the affirmative vote of a majority of
the members elected to the Council shall be necessary to adopt any
ordinance, resolution, order or vote . . . .” Where, as here, the City Council
was considering the adoption of the ordinances, unless the Charter provides
otherwise, under the plain language of Charter section 15, a majority vote of
the City Council members is required. Charter section 103 “otherwise
provide[s]” that a larger, two-thirds “supermajority” would be required to
grant, renew, extend or amend a franchise; but Charter section 103 does not
include the termination of a franchise. Therefore, under the plain language
of Charter section 15, only a majority vote would be needed for such
termination.
Charter section 15 is not itself ambiguous; but as noted above, we
further consider whether the text shows us a different objective.
Charter section 15 appears in article III of the Charter. That article
addresses the legislative power of the City Council, including the term and
duties of council members (section 12), council rules (section 14), and the
provision that a “quorum” consists of “[a] majority of the members elected to
the Council . . . .” (section 15). A “quorum” is defined as “the minimum
number of members . . . who must be present for a deliberative assembly to
legally transact business.” (Black’s Law Dict. (12th ed. 2024) p. 1509.)
Considered as a whole, we conclude that the functions of Charter
section 15 are to define a quorum; to specify the standard vote threshold (a
majority of City Council members); and to provide guidance on dealing with
the problem that would arise if a quorum were lacking (i.e., a majority of

30
Council members are not present) by allowing the City Council to act on the
quorum problem (because without a quorum, a majority vote would be
impossible). These functions are consistent with the plain language in
Charter section 15 and do not demonstrate any ambiguity.
The City and SDG&E argue that Charter section 15 sets minimum vote
thresholds for valid action and does not establish a voting ceiling (the
maximum number of votes required to act) or otherwise prevent the City
Council from voting to implement higher vote thresholds in its discretion.
In support of this interpretation, the City and SDG&E point to
Municipal Code section 22.0101, rule 7.3.2(b), which provides that the city
attorney include in a proposed ordinance “whether a supermajority vote of
the Council is required for its passage.” We do not read this Municipal Code
section as conferring legislative discretion to create supermajority
requirements for future City Council action; instead, it merely ensures that
ordinances are clear about whether a supermajority vote will be required for
the adoption of the ordinance (e.g., the award of a franchise under Charter
section 103) and which actions would not require a supermajority (all matters
“otherwise provided [in the Charter]).”
The City and SDG&E also point to various procedural rules in the
Municipal Code that require a supermajority. For example, if the City
Council wishes to reconsider a vote on a noticed matter, a two-thirds vote to
suspend the Rules of Council is required before the City Council can vote on
the motion to reconsider. (Mun. Code, § 22.0101, rule 2.12.1(c)(3).) But a
procedural provision in the Municipal Code cannot supersede a substantive
provision in the Charter. As noted above, the Charter is the City’s highest
form of law; Municipal Code provisions cannot take precedence over Charter
provisions. (Domar, supra, 9 Cal.4th at p. 170.) Further, it is not argued

31
that the Municipal Code procedural provisions contradict any specific
provisions of the Charter.
The City and SDG&E contend that “[n]othing forbids the Council from
determining . . . that certain actions be undertaken only after approved by a
supermajority [vote].” They argue the City can choose to impose a higher
burden on itself than provided by Charter section 15. But the City can
always exceed the majority vote requirement if it wishes; no doubt the City
Council members vote unanimously on matters before it from time to time.
The question is whether today’s City Council can bind a future City Council
to a supermajority vote in a situation in which the Charter does not provide
for it (such as on a vote to terminate a franchise). We think it cannot.
Case law also casts doubt on the “minimum vote” argument. In
Howard Jarvis Taxpayers Assn. v. City of San Diego (2004) 120 Cal.App.4th
374 (Howard Jarvis), the court considered a similar argument, concluding
that where the state Constitution required only a majority vote to amend a
Charter, a ballot proposition could not require a supermajority to do so.
Plaintiff there had argued that the proposition did not violate the
constitutional requirement for a majority vote because the majority vote
requirement simply meant that the tax would be unconstitutional if it wasn’t
approved by “at least” a majority vote, and a two-thirds vote did not fall
below that threshold. (Id. at p. 392.)
The court rejected this argument, concluding that the language
(“approved by a majority vote”) “clearly and unambiguously means that
approval of a local government’s imposition or increase of any general tax
requires only a majority vote, and a two-thirds vote cannot be required for
such approval.” (Howard Jarvis, supra, 120 Cal.App.4th at pp. 392–393.)
The court further commented, “[h]ad the drafters of article XIII C intended

32
the term ‘majority vote’ to mean ‘at least a majority vote’ or a ‘majority vote,
including a two-thirds vote at the election of the electorate,’ they easily could
have done so.” (Ibid.) Instead, looking at the language of article XIII C, the
court found that “majority vote” and “two-thirds vote” should “be treated as
separate and distinct voting requirements.” (Howard Jarvis, at pp. 392–393.)
So too here. In more than a dozen places the Charter requires a two-
thirds vote for City Council action. The majority vote requirement in Charter
section 15 is separate and distinct from the supermajority requirements
found elsewhere in the Charter. To paraphrase the Howard Jarvis case, had
the drafters of Charter section 15 “intended the term ‘majority vote’ to mean
‘at least a majority vote’ or a ‘majority vote, including a two-thirds vote at the
election of the [City Council],’ they easily could have done so.” (Howard
Jarvis, supra, 120 Cal.App.4th at pp. 392–393.)
The City and SDG&E argue alternatively that a City Council
determination to terminate a franchise falls within Charter section 103’s
provision for a two-thirds vote for “amendments” to a franchise. However, if
the City Council voted to terminate the franchises, it would not be amending
the franchises in any way. Nothing about the ordinances would be
“amended” or changed by the vote. The ordinances contemplate possible
termination and none of their language would need to be amended for the
City Council to be able to terminate them.
Accordingly, our independent review satisfies us that the trial court did
not err in ordering the severance of the two-thirds requirement for
termination from the balance of the ordinances.

33
D. THE CITY CORRECTLY CONCLUDED THAT CEQA DID
NOT APPLY TO THE ORDINANCES, AND THEREFORE
THE TRIAL COURT DID NOT ERR IN DENYING THE
CEQA CAUSE OF ACTION
1. Additional Background
In May 2021, the City’s planning department sent a memorandum to
the mayor’s office, setting forth its conclusion that the award of the
franchises to SDG&E was not subject to CEQA. Following a public meeting
and discussion, the City Council voted and approved the proposed franchise
agreements. The City Council later issued a resolution concluding that
CEQA review was unnecessary and adopted the two ordinances awarding the
gas and electric franchises to SDG&E. The City later filed a notice of
exemption with the San Diego County Clerk reflecting the City Council’s
determination that the franchise agreements were exempt from CEQA.
In its petition, POCF alleged the City applied an improper legal
standard when it determined the ordinances were not subject to CEQA. The
trial court bifurcated the hearing for the CEQA claims from the remaining
claims. Relying on UMMP, supra, 7 Cal.5th 1171, the court concluded that
the ordinances constituted a project for purposes of CEQA, because they
allowed SDG&E to construct, maintain, and use pipes, poles, wires and
appurtenances to distribute gas and electricity, and therefore it was
reasonably foreseeable that the ordinances could result in new construction
causing environmental change. Nonetheless, the court concluded the
ordinances were categorically exempt from environmental review under the
“existing facilities” exemption (CEQA Guidelines, § 15301; id., § 15300.2,
subd. (c)) and denied the CEQA cause of action. As we explain below, we do
not reach the analysis as to potential exemptions, because in our independent

34
review, we conclude the ordinances do not constitute a project for CEQA
purposes.
2. Legal Principles
Under CEQA, we review the agency’s actions (as opposed to the trial
court’s decision). (Vineyard Area Citizens for Responsible Growth, Inc. v. City
of Rancho Cordova (2007) 40 Cal.4th 412, 427.) Our inquiry extends only to
whether there was a prejudicial abuse of discretion. (Pub. Resources Code,
§ 21168.5.) “Such an abuse is established ‘if the agency has not proceeded in
a manner required by law or if the determination or decision is not supported
by substantial evidence.’ ” (Vineyard Area, at pp. 426–427.) When our review
requires us to interpret a statute, our primary goal is to determine the
Legislature’s intent to fulfill the purpose of the law. (Coalition of Concerned
Communities, Inc. v. City of Los Angeles (2004) 34 Cal.4th 733, 737.)
Whether an activity constitutes a project under CEQA is a legal
question “to be decided on ‘undisputed data in the record on appeal.’ ”
(UMMP, supra, 7 Cal.5th at p. 1198.) As with any CEQA provision, courts
should interpret a “project” in a way that affords “the fullest possible
protection to the environment within the reasonable scope of the statutory
language.” (CEQA Guidelines, § 15003, subd. (f); Laurel Heights
Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d
376, 390.)
CEQA sets out a three-tier process to ensure that public agencies take
environmental factors into account when making decisions. (Muzzy Ranch
Co. v. Solano County Airport Land Use Com. (2007) 41 Cal.4th 372, 379–380.)
“First, the agency must determine whether the proposed activity is subject to
CEQA at all [i.e., whether the proposed activity constitutes a ‘project’].
Second, assuming CEQA is found to apply, the agency must decide whether

35
the activity qualifies for one of the many exemptions that excuse otherwise
covered activities from CEQA’s environmental review. Finally, assuming no
applicable exemption, the agency must undertake environmental review of
the activity, the third tier.” (UMMP, supra, 7 Cal.5th at p. 1185.) When an
activity does not meet the definition of a project, the agency is not required to
conduct any additional CEQA review. (UMMP, at pp. 1185–1186.)
The question of whether an activity is a CEQA project focuses on its
general nature and type, not on whether it will ultimately affect the
environment. (UMMP, supra, 7 Cal.5th at pp. 1195–1196.) A “project” is an
activity undertaken, supported, or approved by a public agency that may
cause either a direct physical change in the environment or a reasonably
foreseeable indirect physical change in the environment. (Pub. Resources
Code, § 21065; see also CEQA Guidelines, § 15378, subd. (a).) An effect is not
considered reasonably foreseeable if there is no clear link between the
activity and the change, or if the connection is too weak or speculative.
(UMMP, at p. 1197.)
Relevant here, a CEQA project does not include “[t]he creation of
government funding mechanisms or other government fiscal activities, which
do not involve any commitment to any specific project which may result in a
potentially significant physical impact on the environment.” (CEQA
Guidelines, § 15378, subd. (b)(4).) The CEQA Guidelines further provide that
“ ‘project’ refers to the activity which is being approved and which may be
subject to several discretionary approvals by governmental agencies,” but
“does not mean each separate governmental approval.” (CEQA Guidelines,
§ 15378, subd. (c).) “ ‘This definition ensures that the action reviewed under
CEQA is not the approval itself but the development or other activities that
will result from the approval.’ ” (Citizens for a Megaplex-Free Alameda v.

36
City of Alameda (2007) 149 Cal.App.4th 91, 106.) An “approval” of a project
refers to “the decision by a public agency which commits the agency to a
definite course of action in regard to a project intended to be carried out by
any person.” (CEQA Guidelines, § 15352, subd. (a), italics added.)
3. Analysis
POCF argues that the City’s adoption of the ordinances and related
agreements qualifies as a “project” under CEQA. According to POCF, these
franchise approvals represent a binding long-term commitment that limits
consideration of environmentally superior alternatives and creates a causal
link sufficient to trigger CEQA review. We disagree.
As noted above, under CEQA, an “approval” refers to a decision by a
public agency that commits it to a specific course of action regarding a
project. (CEQA Guidelines, § 15352, subd. (a).) However, fiscal activities or
funding mechanisms that do not involve a commitment to any specific
undertaking with the potential for significant environmental impact are not
considered “projects” under CEQA. (CEQA Guidelines, § 15378, subd. (b)(4).)
UMMP, supra, 7 Cal.5th 1171, illustrates this distinction. There, the
court considered a zoning ordinance adopted by the City that allowed for the
creation and operation of medical marijuana dispensaries. (Id. at pp. 1181–
1182.) The court found the ordinance qualified as a CEQA “project” because
the regulatory changes authorized a substantial number of new businesses
and could foreseeably result in new commercial construction and altered
citywide traffic patterns. (UMMP, at pp. 1197, 1199.) The necessary causal
connection existed because the ordinance was a significant step toward
establishing businesses likely to affect the environment. (Id. at p. 1199.)
In UMMP, the court contrasted City of Livermore v. Local Agency
Formation Com. (1986) 184 Cal.App.3d 531 and Kaufman & Broad-South

37
Bay, Inc. v. Morgan Hill Unified School Dist. (1992) 9 Cal.App.4th 464
(Kaufman) as examples of what does and does not constitute a CEQA project.
(UMMP, supra, 7 Cal.5th at p. 1197.) In City of Livermore, a county agency
revised its sphere of influence guidelines to allow development in open space
and agricultural lands. (City of Livermore, at pp. 542–543.) Because CEQA
defines “project” to include actions such as amending zoning ordinances or
General Plans (CEQA Guidelines, § 15378, subd. (a)(1)) and excludes only
continuing administrative activities unless applied to a specific instance (id.,
§ 15378, subd. (b)(2)), the court found the guideline revisions analogous to a
General Plan amendment promoting future growth. (City of Livermore, at
p. 539.) They therefore constituted a project requiring the preparation of an
environmental impact report. (Ibid.)
By contrast, in Kaufman, supra, 9 Cal.App.4th 464, the formation of a
community facilities district to raise funds for potential future school needs
was not a CEQA project. (Kaufman, at p. 474.) The court found no causal
link between the community facilities district and school construction, noting
it created no new demand, imposed no binding commitment, and left all
future options open. (Id. at pp. 474, 476.) The court held that where funding
measures alone are at issue, CEQA applies only if there is a binding
commitment to spend in a specific manner—which was not the case there.
(Kaufman, at p. 476.)
Like UMMP, supra, 7 Cal.5th 1171, POCF contends the franchise
approvals in this case similarly commit the City to a long-term energy policy
and authorize construction and energy delivery in a manner triggering CEQA
review. This comparison to UMMP is misplaced. In UMMP, the zoning
ordinance created a new regulatory framework that allowed for the
establishment of entirely new businesses—medical marijuana dispensaries—

38
which, in turn, could foreseeably lead to new retail construction and changes
to citywide traffic patterns. (Id. at pp. 1197, 1199.) The court found a
sufficient causal connection between the zoning ordinance and the potential
environmental effects, because the zoning ordinance was a necessary step
toward business development that could affect the environment. (Id. at
p. 1199.)
In contrast, the franchise approvals at issue here do not authorize new
residential or commercial development, establish new land uses, or encourage
population growth. They do not facilitate the creation of new businesses, nor
do they change land use patterns or service areas. Like the community
facilities district in Kaufman, supra, 9 Cal.App.4th 464, the franchise
approvals merely establish a funding and administrative structure, without
committing the City or SDG&E to any particular development or
construction. Crucially, there is no causal link—either direct or reasonably
foreseeable—between the City’s approvals and any potential physical change
in the environment. (Id. at p. 474.)
Although we can speculate as to the need for future infrastructure work
by SDG&E, including possible extension of service to a new development or a
need for major maintenance projects, any actual work will depend on
independent factors, such as customer demand or changes in technology. As
in Kaufman, the absence of a binding commitment or foreseeable
environmental consequence defeats the claim that CEQA review is required.
(See also UMMP, supra, 7 Cal.5th at p. 1197 [weak or speculative link
between activity and the environmental change is not a reasonably
foreseeable link].)
Indeed, SDG&E was already delivering gas and electric services to City
residents prior to the new franchise agreements. The only material effect of

39
the approvals is to allow SDG&E to continue providing those services under
revised terms. (CEQA Guidelines, § 15352, subd. (a).) POCF points to
language in the ordinances allowing SDG&E to “construct” and “maintain”
infrastructure. But the existence of this generic language does not mean
construction is imminent or environmentally significant. The ordinances
simply permit SDG&E to use existing infrastructure—or infrastructure
“lawfully placed” in the future—within City streets, and it does so in a
manner indistinguishable from SDG&E’s historic operations. This language
does not establish the existence of a “project” under CEQA because it
contains no commitment to undertake any specific work. It is purely
enabling language, authorizing SDG&E to continue lawfully using City
streets for its infrastructure in the same manner it has historically done and
setting the fiscal terms for such authorization—nothing more.
Further, and importantly, if and when any such work is proposed, the
work will require its own separate regulatory approvals, including applicable
CEQA approvals. The ordinances expressly require that any facilities or
equipment constructed, maintained, used, or removed by SDG&E comply
with “applicable law,” including environmental protection laws. The
administrative MOU underscores this point, stating it “does not supersede
any CITY permits, permissions or other approvals [SDG&E] is required to
obtain to perform Work as described in this MOU.” Taken together, the
provisions in the ordinances and administrative MOU foreclose any
reasonable claim that the ordinances approve or commit the City to a project.
They neither authorize specific construction nor exempt SDG&E from future
permitting or environmental review for such future projects.
In summary, the franchise approvals maintain the status quo, do not
compel or induce new construction, and lack the causal connection necessary

40
to trigger CEQA. Requiring CEQA review now, based on undefined,
speculative scenarios, would serve no practical purpose and would contravene
CEQA’s rule that it applies only when an activity may cause a reasonably
foreseeable physical change in the environment. (Lake County Energy
Council v. County of Lake (1977) 70 Cal.App.3d 851, 854–855.) The City’s
determination that CEQA does not apply is both legally sound and supported
by substantial evidence. Because we agree with the City that the franchise
approvals do not qualify as a project under CEQA, we need not address
whether they fall within an exemption from CEQA review. Accordingly, the
trial court correctly denied POCF’s petition for a writ of mandate as to the
CEQA cause of action.
IV. DISPOSITION
The orders are affirmed. The City and SDG&E are entitled to their costs
on appeal.

KELETY, J.

WE CONCUR:

DATO, Acting P.J.

BUCHANAN, J.